Leighton illustrates how commoditization kills profits and he identifies how to avoid it through inspired marketing and innovation.

1. Avoiding the!
Commodity Trap!
By Peter Leighton!

2. Undifferentiated brands drive consumers to private label and
they force the consumer to buy on price differentiators.
Innovation is the key component to differentiation and brand
value. Innovation:!
4 Insulates the brand from competition!
4 Sustains sales velocity!
4 Differentiates products!
4 Extends product lifecycle!
You don’t build innovation through focus groups or by
following others. Focus groups are like looking in the rear
view mirror: consumers can only articulate what is already
known. And if you are following the path of someone else,
you are by definition a follower. !
Innovation is the articulation
of an unmet need.! Use innovation to drive new growth by
providing an unarticulated benefit.!
Through ethnographic
research, P&G found
certain cleaning needs
that were not being
addressed by current
products. Similarly they
noticed some loyal
consumers, who “loved”
the current Tide
packaging, but were
afraid of breaking their
nails on the box; this led
to a new packaging
solution and a new
category segment.!
The days of mass marketing are history. And like the Oldsmobile, so are
the marketing techniques of your fathers generation. Target a niche or
specialized audience, one that is vested in the solutions you provide. It is
better to be a leader of several small segments than a follower in the
category. Segmented brands stand for something concrete, and they
create a stronger bond with the user. Understanding consumer’s
lifestyles, needs and behaviors provides insight into how, what and when
to market to them.!
Segmentation grows market share
and build brands.!
Clif segmented the nutrition bar category
with Luna, the first bar for women.
Through this strategy Clif is the market
leader, even though the market has been
flooded by imitators.!
Segmentation drives new
users and defines a brand.!
When brands become products and products commoditize, corporate profits erode. Some claim this is part of a
natural product lifecycle. But upon further investigation, it is really the result of uninspired marketing. So how do
branded companies avoid the trap of commoditization? Here are four factors that will help you steer clear of
commoditization and build better brands: !

3. Marketing-driven brands build long term value. Marketing is the strategy
that drives sales, merchandising, product development and builds brands
that have meaning. Move away from a transactional approach (making a
sale) towards an evangelical approach (building brand advocates and
“raging fans”). Engage consumers. And the best way to do this is to focus
on smaller, targeted consumer segments, and deliver relevant brands.
The way people actually make decisions often violates the principles of
standard economic assumptions. For instance, people don’t evaluate
things in absolute terms. They evaluate them relative to a comparison
standard, or “reference point”. Smart marketing brands find these insights
through a host of tools such as ethnography.!
Apple went from the verge of !
bankruptcy to the most !
valuable brand in the world!
by unlocking demand for!
something that had yet!
! to be articulated. They!
! found a way to!
! deliver a better!
experience of
technology in a simple
solution. !
Build leadership by defining the
market, or create a new one.!
Either you are forging new trails and kicking up dust, or you are
following others and eating their dust. Leadership requires a
careful but realistic perspective of the environment, and a
willingness to be first…and be exposed. But sometimes the
winning idea is the simplest one. Apple, Southwest, Ikea,
Nintendo, and many more companies trace their success to
unlocking demand that was pent up because existing solutions
were too expensive or too complicated. These companies found
a market opportunity just sitting there, waiting for someone to
develop a convenient, affordable solution.!
Leadership means taking a
different path.!
Make your product more emotional by
turning it into something social; !
create a sense of shared ownership !
and participation.!
Jones Soda built a
niche brand through
authenticity. They
merchandised in
locations where other
brands were not; they
used consumer’s own
photos on the labels;
they introduced unique
flavors.!
Marketing is the core
to sustained growth.!
Ethnography is a set of tools used to study people and culture through deep immersion into
everyday life; What people do and why. Unlike traditional market research, ethnographic
researchers visit consumers in their own environment to observe and listen in a non-directed
way. The following are some insights into “viral” or contagious marketing approaches.!

4. Six Principles of !
Contagious Marketing!
People will
share things
with others
that make
them look
good. They
chose brands
like a badge.!
Social
Currency!
Triggers! Emotion!
Practical
Value!
People
make
contextual
connections
between
things.!
When people
care, they
share.
Emotion
drives
engagement
for good or
bad.!
Information
travels under
the guise of
idle chatter.
It’s all about
the story.!
Stories!
People want
to learn new
things of
value; Make
it easy and
part of the
process.!
Public!
Seeing is
believing;
Build
attention
into the
brand.!
Courtesy of Jonah Berger!

5. Abunda is an integrated consulting group, designed to offer top tier management and
strategic solutions to growth-oriented companies. Our mission is to deliver value through
innovative market approaches and increased profitability. Abunda delivers solutions for the
life sciences, health & nutrition and functional foods markets. www.abundasolutions.com!
Peter Leighton!
peter@abundasolutions.com!
+001 (801) 550-6962!
SKYPE: advana_science!
Contact:!
Telling vs. Selling!
Traditional marketing was all about “pitching” a product. But when you pitch something you are asking the listener or buyer to
evaluate your sales pitch. With a story you are engaging the audience with an idea and asking them to participate. Stories
focus people on potential solutions, which you hopefully have provided.!
Communication is another area where it’s important to apply your segmentation strategy. Define the communication tools
accordingly that best supports your targeted audience and leverages the six principles noted. Always remember to:!
i Support existing perceptions and habits; don’t expect to train people to new behaviors.!
i Clearly illustrate benefit, and highlight the simplicity of the solution you provide.!
i Build upon existing knowledge, recognizing each niche audience has it’s own unique understandings.!
i Limit scientific terminology; don’t sell a pitch, tell a story.!
Everyday the average American engages in more than 16 word-of-mouth
episodes, conversations or opportunities where they share an opinion about
something pertinent in their life. A commodity product is not usually interesting
enough to dominate a word-of-mouth episode (stories). But people want to boast
about something they know (practical value) or a brand that says something
positive about themselves (social currency). And brands drive meaning through
context (triggers) and when they mean something to our life (emotion). And a
good brand is distinctive in how it promotes itself (public).!